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  1. Members of the parliament in Kazakhstan have proposed the establishment of a state register for cryptocurrency farms operating in the country. Alarmed by the growing consumption of energy in the sector, the lawmakers also want to charge miners a higher price for the electricity they use. Mazhilis Members Want Miners in Kazakhstan to Register With Government, Pay More for Power A group of deputies from the Mazhilis, the lower house of Kazakhstan’s bicameral legislature, have voiced concerns over the growing electricity demand. The parliamentarians believe the surge is due to the influx of crypto mining companies into the country, attracted by its low energy prices. Members of the People’s Party of Kazakhstan have put forward proposals to deal with the escalating situation. According to a report by Tengrinews, the lawmakers have urged Deputy Prime Minister Roman Sklyar to create a special register for crypto farms that mint digital currencies in the country. Zhambyl Ahmetbekov, one of the deputies, noted that the increasing number of mining entities moving to the Central Asian nation significantly affects the volume of available energy. Foreign miners consume enormous amounts of electricity but they receive their revenues abroad, bringing no benefit to Kazakhstan, he pointed out, further stating: In this regard, it is proposed to create a legislative register to account for the so-called mining farms and introduce a special increased electricity tariff for them. Besides the higher electricity rate, the Mazhilis members have also called for the reintroduction of differentiated tariffs for the respective time zones of the day. Thus, prices will take into account peak hours of consumption and grid loads. The proposals come after Kazakhstan’s energy minister Magzum Mirzagaliev revealed that power consumption this year jumped by 7% in comparison with 2020. “This is a very big increase,” the official said at a press conference last week, making it clear that the government is considering restrictions on mining facilities. The spike in demand is largely due to the growing number of data centers devoted to cryptocurrency mining, Mirzagaliev told reporters. At the same time, he stressed that Kazakhstan needs to develop its crypto mining sector and announced the country intends to build new power plants with a combined 3,000-megawatt capacity in the next five years. Amid an ongoing crackdown on bitcoin mining and other crypto-related activities in China, the region of Central Asia has attracted many businesses from the industry with its cheap energy. However, in Kazakhstan miners compete for electricity with other industries and households, which is worrying authorities in Nur-Sultan. In June of this year, President Kassym-Jomart Tokayev signed a law amending the country’s legislation “on taxes and other obligatory payments to the budget.” The bill, adopted in parliament earlier that month, introduced a surcharge of 1 Kazakhstani tenge (approx. $0.0023) per kilowatt-hour used by cryptocurrency miners. The new fee will be imposed on Jan. 1, 2022.
  2. SEC Chairman Gary Gensler says that the SEC has no plan to ban cryptocurrencies as China has done. He noted that it would be up to Congress to make such a decision. Recently, Federal Reserve Chairman Jerome Powell similarly said that the Fed had no intention to ban or limit the use of cryptocurrencies. SEC Won’t Ban Cryptocurrencies The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, answered a question about whether there is a plan to ban cryptocurrency during a hearing before the U.S. House Committee on Financial Services Tuesday. The four-hour virtual hearing titled “Oversight of the U.S. Securities and Exchange Commission: Wall Street’s Cop Is Finally Back on the Beat” was hosted by Committee Chairwoman Maxine Waters and Ranking Member Patrick McHenry. During the meeting, Rep. Ted Budd from North Carolina asked Gensler if he had any plans to ban cryptocurrencies. The congressman began by stating: “China has been on a warpath against cryptocurrencies, it seems since 2013. We’ve seen them implement bans on mining, initial coin offerings [ICOs], cryptocurrency exchanges, and their most recent move, an outright ban on cryptocurrencies themselves.” Congressman Budd asked: “Chairman, do you support what China has done, and is the SEC planning on implementing similar bans?” Gensler replied: I’m familiar with a number of the things that you mentioned in terms of the People’s Republic of China. I think our approach is really quite different. “It’s a matter of how do we get this field within the investor and consumer protection that we have, and also working with bank regulators and others,” the SEC chairman continued. He also stressed the need to ensure that the Treasury Department has crypto within anti-money laundering (AML) laws and tax compliance, adding that there is also “the financial stability issue that stablecoins could raise.” Since Gensler did not directly respond about any plans to ban crypto, Rep. Budd reiterated his question: “But no bans that you are interested in implementing via the SEC as China has done, really to funnel everyone through their own digital currency?” The SEC chairman replied: No, that would be up to Congress. “We have been working with the authority you’ve given us,” Gensler clarified. He added that many tokens do meet the tests of being a security, emphasizing that it is important to “bring them within the investor protection remit of the SEC.” Recently. Rep. Budd also asked Federal Reserve Chairman Jerome Powell whether the Fed had any plans to ban cryptocurrency. Powell similarly said there was no intention to ban or limit the use of cryptocurrencies.
  3. A coordinated strike involving Europol, Interpol, and the U.S. Federal Bureau of Investigation (FBI) has led to the arrest of two “prolific” ransomware operators allegedly responsible for ransom demands of up to 70 million euros. In addition, $1.3 million in cryptocurrencies were seized. Ransomware Operators Arrested, Crypto Seized The International Criminal Police Organization (Interpol) announced Monday: Two prolific ransomware operators suspected of carrying out a string of attacks, demanding ransoms of up to EUR 70 million [$81 million], have been arrested in Ukraine. The arrests followed “a coordinated strike between the French National Gendarmerie (Gendarmerie Nationale), the Ukrainian National Police (Національна поліція України) and the United States Federal Bureau of Investigation (FBI), with the coordination of Europol and Interpol,” the European Union Agency for Law Enforcement Cooperation (Europol) explained. The arrests took place on Sept. 28. The authorities conducted seven property searches. They seized $375,000 in cash, two luxury vehicles worth 217,000 euros, and $1.3 million in cryptocurrencies. Europol detailed: The organized crime group is suspected of having committed a string of targeted attacks against very large industrial groups in Europe and North America from April 2020 onwards. “The criminals would deploy malware and steal sensitive data from these companies, before encrypting their files,” Europol continued. “They would then proceed to offer a decryption key in return for a ransom payment of several millions of euros, threatening to leak the stolen data on the dark web should their demands not be met.”
  4. The U.S. has launched the National Cryptocurrency Enforcement Team, an initiative of the Department of Justice (DOJ), to tackle and prosecute “criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering.” U.S. Deputy Attorney General Lisa Monaco said, “The point is to protect consumers.” DOJ’s New Crypto Enforcement Initiative U.S. Deputy Attorney General Lisa Monaco announced the creation of a National Cryptocurrency Enforcement Team (NCET) during a virtual speech at the Aspen Cyber Summit Wednesday. The aim of the initiative is “to tackle complex investigations and prosecutions of criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure actors,” the Department of Justice subsequently detailed. “The team will also assist in tracing and recovery of assets lost to fraud and extortion, including cryptocurrency payments to ransomware groups.” Monaco was quoted as saying: We are today launching the National Cryptocurrency Enforcement Team. We won’t hesitate to go after laundering platforms and are drawing on cyber experts and prosecutors, and money laundering experts. The goal of the National Cryptocurrency Enforcement initiative is to “strengthen” the ability of the Department of Justice (DOJ) to disable financial markets that allow cybercriminals to “flourish.” The team will include anti-money laundering and cybersecurity experts. Monaco said: Cryptocurrency exchanges want to be the banks of the future. Well, we need to make sure that folks can have confidence when they’re using these systems and we need to be poised to root out abuse. The point is to protect consumers. The deputy attorney general also announced another DOJ initiative Wednesday. The new civil cyber fraud initiative will “use civil enforcement tools to pursue companies, those who are government contractors, who receive federal funds, when they fail to follow recommended cybersecurity standards,” she detailed. “For too long, companies have chosen silence under the mistaken belief that it’s less risky to hide a breach than to bring it forward and report it. That changes today.” Last week, President Joe Biden said that the U.S. was bringing together 30 countries this month to tackle cybercrime issues, including the “illicit use of cryptocurrencies.”
  5. On October 5, the youth fashion and retail brand Pacsun announced the company is now accepting cryptocurrencies via Bitpay’s payment services. Pacsun says the company has a youthful audience that is “very tech-oriented” and the firm has seen an “increasing desire towards cryptocurrency.” Pacific Sunwear of California Goes Crypto The American retail clothing brand, Pacific Sunwear of California, LLC, otherwise known as Pacsun, is now supporting crypto-asset acceptance. Founded in 1982, Pacsun has roughly 400 stores in all 50 states and in Puerto Rico. “Pacsun prides itself on learning from its core consumer of Gen Z. With cryptocurrency being one of the major trends currently among that audience,” the company’s crypto acceptance announcement says. The company has partnered with the crypto payments firm Bitpay and disclosed it will accept 11 different crypto assets including bitcoin (BTC), bitcoin cash (BCH), ethereum (ETH), wrapped bitcoin (WBTC), dogecoin (DOGE), and litecoin (LTC). Five different stablecoins pegged to the U.S. dollar will also be accepted by Pacsun. “With digital sales doubling since last year, we understand the continued importance of creating an exceptional online shopping experience for our customers,” Brie Olson, the president of Pacsun said in a statement. “It’s incredible to pave the way for the fashion and retail industry, being the first to offer cryptocurrency payments through Bitpay, and we anticipate many other companies following suit considering the ease it brings to the checkout process.” Pacsun ‘Sees an Increasing Desire Towards Cryptocurrency,’ Fashion Chain Believes It’s Critical to Keep With Lifestyle Trends The announcement also notes that Pacsun believes it’s “just as critical” to keep up with the fashion trends as it is for them to keep up with lifestyle trends. The company has noticed these trends when they launched their new Pacsun Kids line of products alongside a collaboration with the ROBLOX metaverse. “Pacsun shares our goal to let everyone live life on crypto making them a natural addition to our growing list of top brands adopting cryptocurrency,” Stephen Pair, the co-founder and CEO of Bitpay remarked. Pacsun co-CEO Michael Relich explained that Gen Z is the company’s primary consumer and the demographic is “very tech-oriented.” Relich said that the firm dedicates a lot of time and effort to “align with their lifestyles and resonate with them on a more personal level.” Pacsun has witnessed demand from the young generations who want to pay for goods and services using digital currencies. “Seeing their increasing desire towards cryptocurrency, it was clear that we needed to adjust and offer Bitpay as another payment option, to further instill their confidence in us as one of their go-to retailers that truly listens,” Relich concluded.
  6. The Nasdaq-listed cryptocurrency exchange Coinbase has disclosed that at least 6,000 users were victims of a hacking campaign to gain unauthorized access to the accounts of Coinbase customers. The hackers also took advantage of a flaw in Coinbase’s SMS Account Recovery process to gain access to user accounts. Cryptocurrencies of at Least 6,000 Coinbase Customers Stolen by Hackers Cryptocurrency exchange Coinbase reportedly informed over 6,000 customers this week that their accounts had been compromised and funds were removed. A copy of the letter is posted on the website of California’s Attorney General. In the letter, the exchange explained: Unfortunately, between March and May 20, 2021, you were a victim of a third-party campaign to gain unauthorized access to the accounts of Coinbase customers and move customer funds off the Coinbase platform. At least 6,000 Coinbase customers had funds removed from their accounts, including you. In order to access a user account at Coinbase, the hackers needed to know the email addresses, passwords, and phone numbers linked to the accounts, and have access to a personal email inbox, the company said. “This type of campaign typically involves phishing attacks or other social engineering techniques to trick a victim into unknowingly disclosing login credentials to a bad actor.” Coinbase further explained that “for customers who use SMS texts for two-factor authentication, the third party took advantage of a flaw in Coinbase’s SMS Account Recovery process in order to receive an SMS two-factor authentication token and gain access to your account.” The exchange noted that once the hackers got into the affected user accounts, they were “able to transfer your funds to crypto wallets unassociated with Coinbase.” The letter also noted that Coinbase updated its SMS Account Recovery protocols as soon as it learned of the issue, adding: We will be depositing funds into your account equal to the value of the currency improperly removed from your account at the time of the incident. Some customers have already been reimbursed — we will ensure all customers affected receive the full value of what you lost. You should see this reflected in your account no later than today. The Nasdaq-listed crypto exchange also said that it is conducting an internal investigation into this incident and the company is working closely with law enforcement to find the individuals behind this hack. Nonetheless, Coinbase insisted, “We have not found any evidence that these third parties obtained [user] information from Coinbase itself.”
  7. An accused pirate has asked a Texas federal court to dismiss a copyright lawsuit filed by Malibu Media. The adult entertainment company, which has sued thousands of people over the years, is currently suspended by California's Franchise Tax Board. The defense argues that, due to this suspension, the company is not allowed to maintain a lawsuit. In recent years, adult entertainment outfit Malibu Media has often been described as a copyright-trolling operation. The company, known for its popular “X-Art” brand, has gone after thousands of alleged file-sharers in U.S. courts, collecting millions of dollars in settlements. Not too long ago Malibu was one of the most active anti-piracy litigants in the U.S., but in recent years this activity ground to a halt. At the time of writing, only a handful of older cases remain active. John Doe Fights Back These remaining cases include one where the accused file-sharer went on the offense. The “John Doe” defendant filed a long list of counterclaims against Malibu Media, accusing the company of abuse of process, among other things. An amended response to Malibu’s complaint, filed earlier this week, also sums up a list of defenses. Fifteen in total. These include misuse of copyright, fair use, unclean hands, and excessive damages. “Plaintiff does not enforce its alleged copyrights to protect the market for its works or to further the useful arts and sciences,” John Doe writes, referring to the purpose of copyright as defined in the US Constitution. “Rather, Plaintiff monetizes its alleged copyrights through coercive and needless litigation and by extracting settlements from that litigation disproportionate to the minimal value of Plaintiff’s works.” Corporate Status (Still) Suspended These defenses were also part of the original response that was filed months ago. What’s new, however, is that John Doe also argues that Malibu Media can’t be involved in a lawsuit, as its corporate status is suspended. “Plaintiff lacks the capacity to sue. Specifically, Plaintiff is suspended in its state of incorporation, California. Under California law, a suspended corporation cannot maintain a lawsuit,” the defense writes. This suspension over tax deficiencies came to the forefront a few months ago. In June, the court allowed Malibu to get their paperwork in order and get the suspension lifted within 30 days but, apparently, that didn’t happen. At the time of writing, California’s Franchise Tax Board continues to list Malibu Media’s status as suspended. More Suspensions It’s not entirely clear what the issue is but Malibu’s CEO Colette Pelissier is no stranger to this type of problem. One of her other companies, Colette Productions, has been suspended in California over tax troubles since 2019. In addition, Colette Holdings and Colette Properties are suspended as well. Previously, the John Doe defendant asked to freeze Malibu’s assets, so potential attorneys’ fees would be secured in case of a win. In addition, the defendant filed a request to add Malibu’s CEO to the lawsuit. Both of these requests failed. With the amended answer the case will now move forward. And after spending more than two years in court, the accused file-sharer still hopes to come out of this with a victory.
  8. Cloudflare has booked a partial victory in a piracy lawsuit filed by several models whose photos leaked online. The CDN provider previously offered its proxying service to the now-defunct website 'Thothub'. The court agreed with Cloudflare that there's no evidence for direct infringement, but the contributory copyright infringement claim remains intact. Earlier this year Texas-based model Deniece Waidhofer sued Thothub for copyright infringement after the site’s users posted many of her ‘exclusive’ photos. While Cloudflare isn’t new to copyright infringement allegations, this case has proven to be more than a nuisance. The company previously countered the claims with a motion to dismiss but Waidhofer and her legal team didn’t back off. In an amended complaint some of the most egregious allegations against Cloudflare, including the RICO conspiracy, were dropped. However, the copyright infringement claims remained and with two new cosplay models joining the action, the list of defendants expanded. Cloudflare denied these new allegations and submitted a motion to dismiss the copyright infringement claims. In addition, the company filed a separate motion for sanctions, accusing the defendants of fabricating a fatally flawed ‘infringement’ theory. Court Hands Down Mixed Order This week, US District Court Judge Fernando M. Olguin reviewed Cloudflare’s motion and released a mixed order. Judge Olguin dismissed the direct copyright infringement claims against Cloudflare but denied the motion to dismiss the contributory copyright infringement allegations. The three models argued that Cloudflare directly infringed their rights by making copies of the copyrighted works on its servers and deliberately marketing its service to pirate sites. After reviewing the arguments from both sides, Judge Olguin concluded that the direct copyright infringement claim is ungrounded. Even if Cloudflare temporarily stored the infringing material, the models don’t allege any “volitional” conduct. In a copyright infringement context, volitional conduct refers to a causal link. This means that Cloudflare’s actions should be the cause of infringing activity. That didn’t become apparent from the models’ complaints. No Direct Infringement (for now) This failure to include a causal link also applies to other direct copyright infringement allegations. This includes the suggestion that Cloudflare marketed its service to pirate sites. Again, this claim wasn’t backed up properly. “In short, plaintiffs have failed to sufficiently allege that Cloudflare engaged in volitional conduct. The court will thus dismiss plaintiffs’ direct infringement claim with leave to amend,” the court rules. This means that Cloudflare has defeated the direct copyright infringement claims, for now. The models are allowed, however, to file an amended complaint to fix the shortcomings that were highlighted by the court. Contributory Infringement Remains Cloudflare further asked the court to dismiss the contributory copyright infringement claims. According to the models, the CDN provider knew that infringing material was being made available using its system but failed to “take simple measures” to prevent further damage. These allegations were heavily contested by Cloudflare but, for now, the court believes that the facts presented in the complaint are sufficient to move the case forward. “Although Cloudflare challenges the veracity of the allegations in the [first amended complaint], on a motion to dismiss, the court must accept the factual allegations of the complaint as true,” the court concludes. There were more setbacks for Cloudflare, as the court also denied its request to sanction the models and their legal team. The company accused the rightsholders of including unsubstantiated and false claims. However, the court believes that this type of request can be considered at a later stage. Thothub Operators and Advertisers The piracy claims are limited to Cloudflare. The advertising company MultiMedia, also known as Chaturbate, is also listed as a defendant. The court granted MultiMedia’s motions to dismiss the contributory copyright claims, also with the option to amend. The RICO claims against the advertiser are dismissed with prejudice, but unfair competition claims remain intact. Finally, the models failed to identify the “Does” behind the Thothub site, so all claims related to the site’s alleged operators have been dropped from the lawsuit.
  9. Link Global, a bitcoin mine operator in Canada, is facing a fine of up to $7 million for installing power plants to run its miners without government permission. The company installed several power plants without following legal procedures and alleges that, if the penalty is enforced, it will constitute a fatal blow to its finances. Link Global Facing Hefty Fine A bitcoin mine operator in Canada could be fined up to $7 million after setting up a mining operation with power plants without having permission from the government in Alberta. Link Global started operations in Alberta by setting up four gas generators at a site in Sturgeon County, near Edmonton, and also another mine in Kirkwall. According to reports, none of these sites complied with the rule of the Alberta Utilities Commission. The case was put in motion when neighboring communities complained about the noise the sites created. The authorities notified the company it did not comply with their requirements earlier this year, on August 25, and stopped operations of the two mining sites involved. Each of the sites had been operating for more than a year in those conditions. Two Types of Penalties, CEO Reassures Shareholders The Alberta Utilities Commission divides the penalties proposed into two major parts: the first one has to do with the benefits obtained for generating power. The institution alleges that damages in this regard amount to two million dollars. The other part has to do with the benefits obtained for mining bitcoin using this power. This amount goes up to five million, according to estimations. Link Global is contesting the fines, explaining that they are not based on the actual financial reports of the company. It is now relocating these bitcoin mining operations to other locations, to comply with current regulations. Stephen Jenkins, CEO of Link Global, declared to local media: Link has followed the orders issued by the AUC and believes that what enforcement staff is proposing is punitive … I apologize to our shareholders who do not deserve this. We will work tirelessly to ensure the outcome is positive. The company and its shareholders, which are in the process of building two new bitcoin mines in the region, will have to wait till October 14, where their destiny and the definitive fine will be decided in a hearing.
  10. A South African university, the University of Cape Town (UCT) has revealed it will commence blockchain and digital currency classes starting in November. According to the institution, students that enroll and complete the $693 six-week course will be issued a legal certificate. Better Understanding of Blockchain As explained on UCT’s website, students that successfully complete the short course will walk away with “an understanding of how blockchain technology fits into the existing financial systems.” They will also gain an understanding of “how applications such as bitcoin, ethereum, and other crypto-assets can be used.” Further, students enrolling in this course are expected to “investigate the ethical implications of investing in the crypto-asset industry.” They will also discover how ethics and governance can shape new financial infrastructure for the benefit of society. Importance of the Short Course In the course’s overview, the UCT explains why the university has now added blockchain and crypto education to its list of short courses. The overview states: It’s no longer enough to simply know about cryptocurrencies. With crypto-assets and blockchain technologies growing at unprecedented rates, professionals need the ability to analyse and understand how the latest developments in the finance industry will fundamentally change the way the financial system functions in the present and near-future. UCT, which is one of the first higher education institutions in Africa to offer blockchain and crypto lessons, adds that only “organisations that adapt their offerings to either compete with cryptocurrencies or offer services that support the industry are best positioned to take advantage of the rise of crypto assets.”
  11. Cybersecurity company Group-IB, which for several years has investigated hundreds of pirate sites and their connections to organized crime, is currently in the midst of a huge scandal in Russia. Company founder Ilya Sachkov was arrested by local security services this week under suspicion of treason and working with foreign intelligence services. For the past several years, major cybersecurity company Group-IB has been at the forefront of anti-piracy enforcement in Russia. In early 2019, the company was the first to report in detail on so-called ‘pirate CDNs’, specialist content delivery systems that service huge numbers of pirate streaming sites with tens of thousands of movies and TV shows plus supporting artwork and descriptions. Later that year, Dutch anti-piracy outfit BREIN, the Motion Picture Association (MPA), and the Alliance for Creativity and Entertainment, took legal action against several of the operations listed in Group-IB’s reports. These included Moonwalk, a CDN suspected of supplying up to 80% of known Russian streaming portals. Now, however, Group-IB – which is a partner of both INTERPOL and Europol – has serious legal troubles of its own. Law Enforcement Search Group-IB’s Offices in Russia According to a statement issued by Group-IB, on Tuesday afternoon Russian law enforcement officers searched its Moscow office and left the same day. At the time the company said that the reasons for the search were unclear but reassured customers and partners that everything was operating as usual. “The decentralized infrastructure of Group-IB allows us to keep our customer’s data safe, maintain business operations and work without interruption across our offices in Russia and around the world,” the company said. With Group-IB’s top management and lawyers assessing the situation, the company remained quiet. However, in a fresh statement published Wednesday, Group-IB was able to supply additional information. Founder and CEO of Group-IB Arrested Group-IB announced that its lawyers were examining information provided by Moscow’s Lefortovo District Court relating to company founder Ilya Sachkov, who was reportedly arrested on Tuesday as part of the raids. A TASS news agency source reveals that the businessman was arrested under suspicion of compromising national security. “The Lefortovo District Court of Moscow ruled on September 28 to choose custody for a term until November 27 as a measure of restraint for Ilya K. Sachkov suspected of committing a crime stipulated under Article 275 of Russia’s Criminal Code (‘High treason’),” the source said. Sachkov Reportedly Denies Wrongdoing Sachkov’s case files are reportedly marked as ‘classified’ but according to a security agency source quoted by TASS, the 35-year-old denies wrongdoing. “He does not admit the guilt of high treason, which inflicted reputational and national harm to Russia’s interests, or that he cooperated with intelligence services of foreign states,” the source said. High treason carries a potential sentence of up to 20 years in prison but Group-IB says it is “confident in the innocence” of its CEO and “his business integrity”. TorrentFreak requested additional information from Group-IB but the company declined to comment beyond its earlier statements.
  12. In 2020, British singer-songwriter Eddy Grant filed a lawsuit against then-President Donald Trump over the unlicensed use of his 1982 song 'Electric Avenue'. Trump's lawyers attempted to have the copyright claim thrown out, claiming that any use of the song was protected under the doctrine of fair use. U.S. District Judge John Koeltl has now rejected that motion stating that the fair use factors weigh in favor of Grant. With the 2020 United States presidential election campaign in full swing, then-President Donald Trump seized every opportunity to paint Democratic opponent Joe Biden in an unfavorable light. Trump’s platform of choice was invariably Twitter, where in August 2020 he posted an animated video of a speedy train carrying his campaign logo ahead of Joe Biden on a railroad handcar, struggling to keep up. In the background played the 1982 hit ‘Electric Avenue’ by Eddy Grant. The furious British singer-songwriter responded by filing a lawsuit in a New York court, arguing that since Trump had not obtained permission to use the song, its use was an act of blatant copyright infringement. Trump’s Attempts to Have Lawsuit Dismissed In a motion to dismiss, Trump’s lawyers argued that use of the song was allowed under the doctrine of fair use, claiming that Grant created the work for the purposes of ‘musical entertainment’ and Trump used the work for ‘political commentary’. As such, the animation had a “fundamentally different and new purpose” and character from that of the song, meaning that any use was transformative. Trump’s team further argued that the quantity and quality of use of the song in the animation was de minimus since only 17.5% of the track was used. The motion further argued that since no licensing payments were generated, the animation posed “absolutely no threat” to Grant’s licensing opportunities or use of the song in derivative markets. Purpose and Character of the Use In an opinion and order handed down Tuesday by U.S. District Judge John Koeltl, it is revealed that the Court reviewed the animation and finds the arguments of Trump’s legal team largely unconvincing. First up, the purpose and character of the use. “The defendants argue that the video’s use of Electric Avenue was transformative as a matter of law because the video and the song serve different purposes. But the defendants’ argument misapprehends the focus of the transformative use inquiry,” Judge Koeltl writes. “While it is true that the animation is partisan political commentary and the song apparently is not, the inquiry does not focus exclusively on the character of the animation; rather, it focuses on the character of the animation’s use of Grant’s song.” In short, the animation’s political purpose does not automatically render the use of any non-political work transformative under fair use. Furthermore, the Judge notes that the best description of the use of Grant’s song is “wholesale copying” to support a political ad campaign and there was no attempt to modify the song or comment on the song or its author. “Moreover, the animation does not use Electric Avenue as a vehicle to deliver its satirical message, and it makes no effort to poke fun at the song or Grant,” the Judge adds, noting that the defendants have already admitted that the animation is satire, not a parody of Grant or the song, and have offered no justification for their “extensive borrowing”. The disconnect is so great, the Judge adds, that the animation could have used almost any other song to serve its entertainment goals. “The fair-use privilege under § 107 is not designed to protect lazy appropriators. Accordingly, the defendants cannot show that the video’s use of Electric Avenue was transformative as a matter of law,” he adds. Judge Koeltl also casts doubt on the claim that any use of the song was non-commercial, noting that the “crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.” Noting that there is a well-established market for music licensing, the Judge writes that the defendants chose to gain an advantage by using Grant’s song without paying a licensing fee, meaning that the use was indeed commercial, despite the use being political. “Because the use was not transformative and appears at this stage to have been commercial, the first fair use factor favors the plaintiffs,” he concludes. Nature of the Work, Amount of Use Addressing the second fair use factor, where the Court is required to consider the nature of the copyrighted work, Judge Koeltl says that it’s clear that Electric Avenue is a creative work and therefore “closer to the core of intended copyright protection” and there is no dispute that the track is published and publicly available. When balancing both aspects, the nature of the song favors the plaintiffs. In respect of the third fair use factor (the amount and substantiality of the portion used in relation to the copyrighted work as a whole), the Judge notes that the song plays for the majority of the animation, the excerpt used is of central importance to the original song, and the defendants have not explained any purpose for the copying. As a result, this weighs in favor of Grant. Effect of the Use on the Market for the Original The final fair use factor asks courts to consider the effect of the use on the potential market for the work that was copied, which requires the balancing of the benefit to the public if the use is permitted and effect on the copyright holder if the use is denied. Judge Koeltl concedes that the animation is no substitute for the song itself but acknowledges that the use of Electric Avenue may threaten Grant’s licensing markets. “It is plain that widespread, uncompensated use of Grant’s music in promotional videos – political or otherwise – would embolden would-be infringers and undermine Grant’s ability to obtain compensation in exchange for licensing his music,” he writes. Trump’s team argued that Grant offered no evidence that he intends to enter the market for licensing the music to promotional videos but according to the Judge, Grant bears no such burden – the plaintiffs do. “It is the defendants who bear the ultimate burden of showing a lack of market harm, and they cannot do so based simply on the allegations in the Complaint,” his opinion reads. Turning to the potential benefits to the public of allowing copying under fair use, the Judge notes that ridiculing and lampooning public figures is a rich part of the United States’ First Amendment tradition. However, denying Trump will not chill political satire, he simply needed to stay within the law. “Creators of satirical videos like the one at issue here must simply conform any use of copyrighted music with copyright law by, for example: paying for a license; obtaining the copyright owner’s permission; or ‘transforming’ the chosen song by altering it with ‘new expression, meaning, or message’. The creator of the video here did none of that,” he concludes. In summary, the Judge finds that each of the fair use factors weighs in favor of Grant. “The creator of the video here made a wholesale copy of a substantial portion of Grant’s music in order to make the animation more entertaining. The video did not parody the music or transform it in any way. The video’s overarching political purpose does not automatically make this use transformative, and the other fair use factors also favor the plaintiffs at this stage.” As a result, Judge Koeltl denies Trump’s motion to dismiss (pdf)
  13. The Monetary Authority of Singapore (MAS), the country’s central bank, has formally approved two companies to provide crypto services. One is the brokerage arm of DBS, the largest bank in Singapore and Southeast Asia. The other is Independent Reserve, a crypto exchange and OTC trading desk. Singapore’s Central Bank Formally Approves DBS and Independent Reserve DBS Bank announced Friday that its brokerage arm, DBS Vickers (DBSV), “has received formal approval from the Monetary Authority of Singapore (MAS) under the Payment Services Act 2019 to provide digital payment token services as a Major Payment Institution.” The bank explained: “This will enable DBSV, as a member of DBS Digital Exchange (Ddex), to directly support asset managers and companies to trade in digital payment tokens through Ddex.” Eng-Kwok Seat Moey, head of Capital Markets at DBS and chair of the DBS Digital Exchange, commented: Having received formal regulatory approval from MAS, DBSV is now in a better position to support institutional and corporate investors in tapping into the growing potential of digital assets as an investment class. Since its launch in December as a member-only bourse, DBS Digital Exchange has been “growing very rapidly,” the bank said last month, adding that the platform expected the number of trading members to double by the end of December, and grow by 20-30% annually for the next three years. Another company, Independent Reserve, a crypto exchange and OTC trading desk, also announced Friday that it has gained “licensure approval” from the MAS. The exchange, established in Australia in 2013, provides SGD, AUD, USD, and NZD fiat-to-crypto trading pairs. The company wrote: Cryptocurrency exchange Independent Reserve has today received approval for a Major Payment Institution License in Singapore … to operate as a regulated provider for Digital Payment Token Services. Independent Reserve CEO Adrian Przelozny opined: “A well-regulated environment will benefit both investors and crypto industry stakeholders. With tailormade rules for the crypto industry, Singapore currently has the clearest and most detailed licensing requirements of any jurisdiction in Asia.” The exchange announced in August that it received an “in-principle approval” from the central bank. Since then, “we’ve seen an influx of retail and institutional investors,” said Raks Sondhi, Managing Director of Independent Reserve in Singapore.
  14. A government agency in Uzbekistan has published a list of unauthorized crypto exchanges that residents of the country have been advised to avoid. The trading platforms collect personal data and bear no responsibility for the cryptocurrency transactions, officials have warned. Authorities in Uzbekistan Blacklist ‘Unofficial’ Crypto Exchanges The National Agency of Project Management under the President of Uzbekistan has identified a number of online platforms offering crypto trading services without authorization. During a monitoring campaign on the internet, the body registered an increase in activities of such “unofficial” digital asset exchanges. The entities behind them offer Uzbekistani citizens the option to buy, sell or trade crypto assets without having an office in the country. They are usually registered in other jurisdictions and their servers are located abroad, but at the same time they collect personal information from residents of the Central Asian republic, the agency said in a notice published on its website. Half a dozen crypto exchange websites targeting residents of Uzbekistan have been blacklisted: webmoneytashkent.com, wmztashkent.com, wm-torg.com, uzwmz.com, blockchainuz.com, and bitcointashkent.com. Similar services are offered through Telegram bots and groups as well. Their providers, the regulator noted, often remain completely anonymous and can quickly delete a channel. Officials have stressed that these kinds of platforms do not bear any legal responsibility for crypto transactions between various parties and cannot guarantee their legitimacy. Furthermore, they cannot ensure the proper storage of personal data or preservation of confidentiality. The announcement states: The Agency urges citizens to be as vigilant as possible, beware and not use services of such platforms, including so as not to become victims of fraud. Uzbekistan legalized crypto trading in 2018 but then in December 2019 authorities in Tashkent effectively banned residents from purchasing cryptocurrencies though they were allowed to sell. The National Agency of Project Management has now reminded the public that in accordance with the presidential decree “On measures to develop the digital economy in the Republic of Uzbekistan” and the country’s law “On licensing and notification procedures,” the establishment of cryptocurrency exchanges is subject to licensing. The government has tried to encourage certain crypto activities. In January 2020, Tashkent unveiled a plan to set up a national mining pool and the initiative was presented as a priority. The state also said it’s going to establish a licensed cryptocurrency exchange where miners will be able to sell their coins and promised to create a blockchain valley as well as introduce crypto tax exemptions. Uznex, a regulated trading platform operated by the South Korean entity Kobea Group, was launched later that month. However, in September this year, a high-ranking central bank official was quoted as saying that cryptocurrencies such as bitcoin will never be recognized as legal tender. Speaking to local media, deputy chairman of the Central Bank of the Republic of Uzbekistan (CBU) Behzod Hamraev pointed out that unlike cryptocurrencies, the national fiat, the sum, is backed by the bank’s assets. He also expressed his opinion that bitcoin will never be equal to “world currencies” such as the dollar, euro, yen, and ruble.
  15. Argo Blockchain, a London-based cryptocurrency mining company, has announced an expansion of its mining capacity that will more than double its current hashrate. The expansion will be done through the acquisition of 20,000 S19J Pro bitcoin miners from Bitmain, which will be delivered in several installments. These miners will populate the facility the company plans to build in Texas next year. Argo Blockchain Expands Hashrate Argo Blockchain, a London-based crypto mining company, has announced the purchase of 20,000 mining machines to expand its capacity. This is part of the planned company expansion to West Texas, where it will build a mega-mining facility. The mining machines will be provided by Chinese manufacturer Bitmain in consecutive installments. This purchase agreement will allow Argo to more than double its current mining capacity, taking it to 3.7 exahash for Q3 2022, betting big on the future of Bitcoin as a network and a profitable asset. While the amount of the initial deposit for the purchase was not revealed, the company stated that it is being funded with cash reserves. Argo Blockchain has been quick in expanding its mining capacity. In February, it was estimated that the company had 787 petahash. Now the company estimates this number to have risen to 1.7 exahash in less than a year. Texas, a New Miner Mecca It is not strange that Argo picked Texas as the new destination for its upcoming mega-mining center. Texas has been in the sights of miners this year as a destination to settle after the Chinese government declared a cryptocurrency mining ban in several key provinces earlier this year. The key trait that Texas presents to miners is its relatively cheap power tariffs, due to the configuration of its power market. Texas has a deregulated power industry with lots of players in the game, which allows for more competition, and miners plan to take advantage of this in the future. In fact, Argo is just one of the mining companies that have revealed plans to build mining facilities in Texas. In April, mining firm Blockcap announced it was relocating its headquarters to Texas in the midst of a $75 million ASIC purchase. Riot Blockchain, another big cryptocurrency mining firm, bought Whinstone, an in-progress bitcoin mining center also in Texas, for $650 million.
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